Debit Or Credit For Revenue

It either increases an asset or expense account or decreases equity liability or revenue accounts.

Debit or credit for revenue. The credit entry in service revenues also means that owner s equity will be increasing. Let s illustrate revenue accounts by assuming your company performed a service and was immediately paid the full amount of 50 for the service. Utility expense is a sub account of the. If a debit increases an account you will decrease the opposite account with a credit.

An increase is recorded on the credit side and a decrease is recorded on the debit side of all revenue accounts. Rules of debit and credit. For example if items are sold and posted as revenue but then returned the revenue must be debited. When recording a transaction every debit entry must have a corresponding credit entry for the same dollar amount or vice versa.

An increase is recorded on the credit side and a decrease is recorded on the debit side of all liability accounts. A business receives its monthly electric utility bill in the amount of 550. The term debit revenue refers to the act of posting a debit to a stream of revenue. Hence contra revenue accounts will have debit balances.

The increase in the company s assets will be recorded with a debit of 900 to cash. The word debit and credit are abbreviated as dr and cr. Accounts with balances that are the opposite of the normal balance are called contra accounts. Debits and credits are used in a company s bookkeeping in order for its books to balance debits increase asset or expense accounts and decrease liability revenue or equity accounts credits do the reverse.

A debit is an accounting transaction that increases either an asset account like cash or an expense account like utility expense. Since every entry must have debits equal to credits a credit of 900 will be recorded in the account service revenues. A debit is an entry made on the left side of an account. According to the duble entry system of book keeping every transaction must have two aspects debit and credit the word debit derived from a latin word debitum which means what is due again the word credit is derived from a latin word credere which means what is trusted.